Cheaper, Fresh Cycle High For US10Y Yield, Employment Report Due

ACGBs (YM -5.0 & XM -9.0) are cheaper as global bond markets remain under pressure despite geopolitical uncertainty. Global bond yields moved higher overnight led initially by a 15bp increase in 10-year UK Gilts. This was followed by a bear-steepening of the US tsys curve, with the US 10-year yield making a fresh cycle high of 4.93%, the highest level since 2007.

• A better-than-feared 20-year auction prevented a total rout. This was a relief after US tsy auctions last week saw weak demand and large tails.
• Cash ACGBs are 4-9bps cheaper, with the 3/10 curve steeper and the AU-US 10-year yield differential 1bp higher at -17bps.
• Swap rates are 3-9bps higher, with EFPs tighter.
• The bills strip has bear-steepened, with pricing -1 to -4.
• RBA-dated OIS pricing is flat to 2bps firmer across meetings, with a 43% chance of a 25bp hike priced for the November meeting.
• Today, the local calendar sees the Employment Report for September, along with the release of NAB Business Confidence. Bloomberg consensus has 20k new jobs, with the unemployment rate stable at 3.7%.
• QTC announced the launch of a new 5.25% 21 July 2036 bond yesterday, with an initial price guidance range of 80-84bps over the 10-year futures contract. This transaction is expected to price today, subject to market conditions.